Penas vs. Court of Appeals

A notice giving the lessee the alternative either to pay increased rental or to vacate is not the demand to vacate required for an unlawful detainer suit; if the lessee elects to stay, he assumes the new rental and can be ejected only upon default and a proper demand, and the one-year period for filing the ejectment complaint is counted from the last demand to vacate because the lessor may waive earlier demands.

The subject premises had been leased on a month-to-month basis by the late Nazario Penas, Sr. to Lupo Calaycay in 1964. Following the lessor’s death, his heirs gradually increased the monthly rental. By 1990, the heirs sought to terminate the month-to-month arrangement and impose significantly higher rent under a new one-year contract.

• The Lease: On June 26, 1964, Nazario Penas, Sr. executed a written month-to-month lease contract with Lupo Calaycay over premises at 24-B Scout Santiago Street, Barangay Laging Handa, Quezon City (also designated 26-B South D Street), at a monthly rental of ₱110.00.
• Succession and Rental Increases: The original lessor died on February 5, 1976; his heirs, including petitioner Nazario Penas, Jr., executed an extrajudicial settlement of his estate. Petitioner’s mother Concepcion P. Penas died on March 2, 1985, and her children likewise settled her estate. Over the years the monthly rental was gradually increased, the latest amount being ₱691.20.
• First Notice of January 18, 1990: Petitioners, through counsel, sent a letter to private respondent Calaycay stating that they were terminating the month-to-month lease effective March 1990 and demanding that he vacate by February 28, 1990. The letter, however, offered Calaycay the option to continue occupying the premises provided he agreed to execute a new one-year lease at an increased monthly rental of ₱2,500.00, plus two months’ deposit, and gave him until February 28, 1990 to decide; otherwise judicial action for unlawful detainer would follow. The demanded rental was later reduced to ₱2,000.00 per month.
• Response and Deposit: Calaycay did not vacate. He continued in possession and, effective March 1990, began depositing monthly rentals with the Philippine National Bank in an account under his name “ITF (in trust for) Spouses Lucila and Nazario Penas, Jr.” In a letter dated March 26, 1990, Calaycay and other occupants informed petitioners that since their representative refused to accept rental payments, the sums would be deposited with a reputable bank and held intact for petitioners. Petitioners never manifested any intention to withdraw the deposits.
• Second Demand of August 10, 1992: Petitioners sent another letter through counsel demanding that Calaycay vacate the premises and pay back rental arrearages of ₱2,000.00 per month from March 1990, totaling ₱60,000.00. Calaycay failed to comply.
• Filing of Complaint: After securing the required Certification to File Action from Barangay Laging Handa, Quezon City, petitioners filed an unlawful detainer suit on September 25, 1992. They alleged that Calaycay had refused to enter into a new lease contract at the increased rate and insisted on paying a lower amount.

• Reckoning of the One-Year Period: Petitioners argued that the one-year period for filing an unlawful detainer complaint should be counted from the last letter of demand to vacate—i.e., August 10, 1992—not from the initial letter of January 18, 1990, because a lessor may waive earlier demands and allow the lessee to remain, consistent with Sy Oh v. Garcia.
• Nature of the First Notice: Petitioners maintained that the January 18, 1990 letter was not a demand to vacate under Rule 70 but merely a notice giving the lessee the option to pay increased rental or vacate. Since Calaycay elected to stay, he assumed the increased rental and could be ejected only upon default and a proper demand, which was made on August 10, 1992.

• Lapse of the One-Year Period: The Court of Appeals, echoing the lower courts, contended that the unlawful detainer suit was time-barred because the first demand was made in January 1990 with a deadline of February 28, 1990, yet the complaint was filed only in September 1992—more than two years later.
• Cessation of Lease Contract: The Court of Appeals further reasoned that because petitioners had not collected the deposited rentals, no lease contract had existed between the parties for two years, converting the remedy into an accion publiciana cognizable by the Regional Trial Court.

• Jurisdiction of the Metropolitan Trial Court: Whether the MeTC had jurisdiction over the unlawful detainer complaint, given that the suit was filed more than one year after the initial letter of January 18, 1990 that gave the lessee the option to vacate or agree to increased rental.

• Jurisdiction of the Metropolitan Trial Court: The MeTC possessed jurisdiction. The one-year period under Section 1, Rule 70 of the Rules of Court is counted from the last demand to vacate, because the lessor may waive his right of action based on earlier demands and permit the lessee to remain. The letter of January 18, 1990 was not the demand contemplated by the Rules; it merely gave the lessee the alternative to pay increased rental or vacate. When the lessee elected to stay, he assumed the new rental of ₱2,000.00 and could be ejected only upon default in paying that amount and after a proper demand to vacate. The demand of August 10, 1992 served as the proper demand, and the complaint filed on September 25, 1992 fell well within the one-year period. Hence, the MeTC had jurisdiction.

• Reckoning of the One-Year Period in Unlawful Detainer — The one-year period within which to file an unlawful detainer complaint under Rule 70 is counted from the last letter of demand to vacate. The lessor retains the right to waive earlier demands and allow the lessee to remain in the premises without forfeiting the summary remedy, so long as the eventual suit is filed within one year from the final demand.
• Notice Giving Option to Pay Increased Rent or Vacate — A notice that gives the lessee the alternative either to pay increased rental or to vacate is not the demand to vacate required in unlawful detainer cases. If the lessee elects to stay, he thereby assumes the new rental, and ejectment lies only after default in paying that increased rent and upon a proper demand to vacate.

• “The one (1) year period provided for in section 1, Rule 70 of the Rules of Court within which a complaint for unlawful detainer can be filed should be counted from the LAST letter of demand to vacate, the reason being that the lessor has the right to waive his right of action based on previous demands and let the lessee remain meanwhile in the premises.”
• “The notice giving the lessee the alternative either to pay the increased rental or otherwise vacate the land is not the demand contemplated by the Rules of Court in unlawful detainer cases. When after such notice, the lessee elects to stay, he thereby merely assumes the new rental and cannot be ejected until he defaults in said obligation and necessary demand is first made.”

• Sy Oh v. Garcia, G.R. No. L-29328, 30 June 1969, 28 SCRA 735 — Affirmed the rule that the one-year period for unlawful detainer is reckoned from the last demand; followed and applied.
• Racaza v. Susana Realty, Inc., G.R. No. L-20330, 22 December 1966, 18 SCRA 1172 — Provided the rationale that the lessor may waive prior demands; cited with approval in Sy Oh and here relied upon.
• Vda. de Murga v. Chan, G.R. No. L-24680, 7 October 1968, 25 SCRA 441 — Directly on point; held that a notice offering the alternative of paying increased rent or vacating is not a proper demand to vacate, and that the lessee who stays assumes the new rental. Followed and applied.

• Section 1, Rule 70, Rules of Court — Governs the one-year period for filing an unlawful detainer complaint. The Court construed the provision to mean that the period runs from the last demand to vacate, consistent with the lessor’s prerogative to waive earlier demands. Because the proper demand was made on August 10, 1992 and the complaint was filed on September 25, 1992, the suit was timely and within the MeTC’s jurisdiction.

Narvasa, C.J., Regalado and Puno, JJ., concurred. Mendoza, J., took no part.